Financial position

In January 2018, the term of the revolving credit facility of €1,150.0 million agreed under the SFA was extended by a year, which means the KION Group can now utilise this credit facility until February 2023. As had been the case at the end of 2017, the only outstanding liability in connection with the bridge loan taken out to fund the acquisition of Dematic (acquisition facilities agreement, AFA) was a floating-rate loan of €1,000.0 million that is due to mature in October 2021.

The KION Group has issued guarantees to the banks for all of the payment obligations under the SFA and AFA and it is the borrower in respect of all the payment obligations resulting from the promissory note. All covenants were complied with as at the end of the quarter.

Analysis of capital structure

Current and non-current liabilities rose by €121.1 million to €9,466.5 million (31 December 2017: €9,345.4 million). Long-term borrowing (net of borrowing costs) was largely unchanged at €2,027.5 million (31 December 2017: €2,024.8 million). The increase of €67.7 million in current financial liabilities to €311.6 million (31 December 2017: €243.9 million) was due to drawdowns under the revolving credit facility. After deduction of cash and cash equivalents, net financial debt amounted to €2,118.9 million (31 December 2017: €2,095.5 million). This equated to 1.4 times the adjusted EBITDA on an annualised basis. > TABLE 11

Net financial debt

11

in € million

31/03/2018

31/12/2017

Change

Liabilities to banks (gross)

1,328.4

1,259.6

5.5%

Promissory note (gross)

1,010.0

1,010.0

0.0%

Other financial liabilities to non-banks

8.8

7.7

14.4%

./. Capitalised borrowing costs

–8.1

–8.6

6.2%

Financial liabilities

2,339.1

2,268.7

3.1%

./. Cash and cash equivalents

–220.2

–173.2

–27.2%

Net financial debt

2,118.9

2,095.5

1.1%

With discount rates unchanged on average, the retirement benefit obligation of €1,014.4 million was close to its level at the end of last year (31 December 2017: €1,002.7 million).

In the reporting quarter, lease liabilities arising from sale and leaseback transactions to fund the leasing business amounted to €988.7 million (31 December 2017: €1,131.1 million). Liabilities from financial services, which related to the leasing business, amounted to €652.0 million (31 December 2017: €437.4 million). Furthermore, the short-term rental business is funded using liabilities from financial services totalling €95.7 million (31 December 2017: €0.0 million). Overall, current and non-current liabilities from financial services increased to €747.7 million (31 December 2017: €437.4 million). Current and non-current other financial liabilities came to €816.1 million (31 December 2017: €962.2 million). This includes liabilities from procurement leases totalling €373.4 million (31 December 2017: €369.1 million), for which right-of-use assets are recorded on the assets side. Other financial liabilities also included liabilities of €386.9 million from sale and leaseback transactions used to finance the short-term rental fleet (31 December 2017: €515.7 million).

Contract liabilities, of which a large proportion related to the long-term project business, were roughly on a par with the prior-year level at €335.4 million (Q1 2017: €324.4 million).

Equity stood at €3,014.8 million as at 31 March 2018, only a marginal change compared with the end of the previous year (31 December 2017: €2,992.3 million). The net income of €68.4 million was offset by negative currency effects of €57.9 million recognised in other comprehensive income. The equity ratio was 24.2 per cent (31 December 2017: 24.3 per cent). > TABLE 10

(Condensed) statement of financial position

10

in € million

31/03/2018

in %

31/12/2017*

in %

Change

*

(Condensed) statement of financial position for 2017 was restated due to the initial application of IFRS 15 and IFRS 16

Non-current assets

9,720.1

77.9%

9,850.6

79.8%

–1.3%

Current assets

2,761.2

22.1%

2,487.1

20.2%

11.0%

Total assets

12,481.3

–

12,337.7

–

1.2%

Equity

3,014.8

24.2%

2,992.3

24.3%

0.8%

Non-current liabilities

6,143.9

49.2%

6,133.7

49.7%

0.2%

Current liabilities

3,322.6

26.6%

3,211.7

26.0%

3.5%

Total equity and liabilities

12,481.3

–

12,337.7

–

1.2%

Analysis of capital expenditure

The KION Group’s total capital expenditure on property, plant and equipment and on intangible assets (excluding right-of-use assets from procurement leases) came to €48.9 million in the first quarter, compared with €40.6 million in the first three months of 2017. Spending in the Industrial Trucks & Services segment, which totalled €36.4 million, again focused on capitalised development costs and on the expansion and modernisation of the Operating Units’ production and technology facilities. Capital expenditure in the Supply Chain Solutions segment amounted to €10.8 million and related to capitalised development costs and, above all, software and licences.

Analysis of liquidity

Cash and cash equivalents increased from €173.2 million at the end of 2017 to €220.2 million as at 31 March 2018. Taking into account the credit facility that was still freely available, the unrestricted cash and cash equivalents available to the KION Group at the reporting date amounted to €1,157.3 million (31 December 2017: €1,138.0 million).

The KION Group’s net cash provided by operating activities totalled €63.0 million, which fell short of the prior-year figure of €124.8 million despite a further strong gain in earnings and margins. While the rise in earnings made a positive contribution, there was a negative impact from the significant increase in net working capital. Reasons for this increase included the growth in business and a temporary rise in inventories resulting from delivery bottlenecks. Higher tax payments and prepayments reduced the level of cash flow from operating activities.

Net cash used by investing activities amounted to €50.2 million in the first three months of 2018 (Q1 2017: €39.6 million) and primarily comprised cash payments for capital expenditure on development (R&D) and for property, plant and equipment totalling €48.9 million (Q1 2017: €40.6 million).

The net cash provided by financing activities amounted to €35.5 million (Q1 2017: net cash used for financing activities of €27.2 million). Financial debt taken on during the quarter came to €451.6 million; repayments came to €385.8 million. Interest and principal payments for liabilities from procurement leases totalled €28.4 million during the reporting period (Q1 2017: €20.9 million). As a result of the optimised financing structure and the corporate actions carried out in 2017, regular interest payments amounted to €8.6 million, a significant reduction compared with the prior-year period (Q1 2017: €15.8 million). > TABLE 12

(Condensed) statement of cash flows

12

in € million

Q1 2018

Q1 2017*

Change

*

(Condensed) statement of cash flows for 2017 was restated due to the initial application of IFRS 15 and IFRS 16